Kurdistan Region reduces debts to foreign oil companies by $1 billion

ERBIL, Kurdistan Region - The Kurdistan Region’s debts owed to oil companies have decreased by 25 percent as the region has paid back an estimated $1 billion to oil companies over the past eight months.

Dr. Aras Khoshnaw head of the Kurdistan Strategic Investigation and Information Center told Rudaw that loans the Kurdistan Regional Government had borrowed from the oil companies since 2014 have been reduced from $4 billion to just $3 billion as the KRG has started paying back its debts over the past eight months.

Khoshnaw added the process of paying the companies their gross payments has encouraged the companies who had oil agreements with the KRG to return and resume their work in oil fields.

He added, the companies have asked the KRG to increase its oil export capabilities as they have increased their productions.

This could be done through two ways, he noted, either through the opening of another route for oil exports, or by adding extra refineries.

According information available to Khoshnaw, the Iraqi government owes the oil companies $70 billion.

The Iraqi government during Nouri al-Maliki premiership cut the Kurdistan Region’s national budget share in early 2014, a move which forced the KRG to borrow large amounts of money from oil companies or delay their payments in a bid to offset its budget deficit to meet the region’s internal needs, notably the salaries of civil servants.

Additionally, lower world oil prices, the influx of more than 1.8 million refugees and IDPs, and increased military expenses because of the war with ISIS which began in the summer of 2014 have been economic challenges for the KRG.

The KRG signed two agreements in early October and November last year with two international financial institutions — Deloitte, and Ernst and Young — to audit the region’s oil and gas sector.